Some thoughts on the recent trends in token crowdsales, presented to Siam Commercial Bank's top management as part of Digital Ventures' briefings on latest trends in the Fintech world.

1. SEPTEMBER 2017
INITIAL COIN OFFERINGS:
AN OVERVIEW

2. RECENT HEADLINES

3. ICO FUNDRAISING DWARFSVC FUNDING
Source: CB Insights, Fortune
Tezos $232M
Self-amending cryptographic
ledger
Bancor $153M
Price discovery and liquidity
mechanism for tokens
Top ICOs (to Aug ‘17)
Initial coin offerings (ICOs) have become the preferred avenue for blockchain startups to raise funds. Even
non-blockchain and non-fintech startups are starting to look at ICOs
EOS $185M
Open source platform for
scalable decentralized apps
Filecoin $250M
Decentralized storage
network
0
200
400
600
800
1000
1200
1400
1600
2016 2017 YTD
Investment in Bitcoin & Blockchain Startups (US$m)
VC ICO
US$1.5 billion in ICO funding in 2017 through August
nearly 3x global VC funding for bitcoin & blockchain
startups in 2016

4. WHAT IS AN ICO?
Create blockchain
protocol layer
Token
Issuer
Generate tokens
Send cryptocurrency
Tokens
Token
Buyers
Features of an ICO
§ Tokens are digital claims to future rewards or
services
§ Transacted on blockchains (typically Ethereum);
tokens purchased via cryptocurrencies (typically
BTC or ETH)
§ Tokens can be freely and immediately tradeable
on cryptocurrency exchanges
§ Tokens are not strictly claims on equity or debt
§ Funds are not raised throughVC or financial
institutions
§ Not currenly regulated
§ Not a new phenomenon; the first token
crowdsale happened in early 2013
What an ICO isn’t
Initial coin offerings, also known as crowdsales, are a method of startup fundraising via the sale of digital
tokens over a blockchain

5. COMPARISON OF FUNDRAISING METHODS
ICO
Equity
Crowdfunding
Reward
Crowdfunding
VC IPO
Startup stage Prototype Prototype Prototype Prototypeàlate stage Late stage
Equity No Yes No Yes Yes
Requirement White paper (optional)
- Desired amount
- Project milestones
- Team
- Types of tokens
- Exchange ratio
Educational materials
- Investment
description
- Types of securities
- Investment limits
Educational materials
- Project description
- Marketing deck
- Types of rewards
Pitch deck
- Management
- Use of funds
- Business model
Prospectus
- Company
description
- Types of securities
- Management
- Financial info
Investors Blockchain enthusiasts Angel investors Early adopters Limited partners Public
Period 3-6 months 1-3 months 1-2 months 3-12 months >1 year
Fundraising cost Low Medium Low High High
Channel Online Online Online Offline Offline
Liquidity Medium Low Low Low High
Downside risks Project fails, fraud Bankrupt Project fails Devalue, bankrupt Price drops

6. FUNDRAISING STEPS
ICO IPO
1. Initiate Write a summary; announce to crypto
community to gather interest and feedback
Hire an investment bank to underwrite the
IPO
2. Documentation - White paper
- Website
Filings with SEC
- Registration statement
- Prospectus
3. Marketing PR-campaign
- Crypto forums
- Slack
Roadshow
- Pre-sale IPO to institutional investors
- Set pricing
4. Sales process Buyers send cryptocurrencies to a digital
address; smart contracts issue tokens
according to exchange ratio
Allocate shares according to book building
5. Listing Tokens listed on a crypto exchange Shares listed on an exchange
Though there are similarities in the process steps between ICOs and IPOs, token sales are faster to execute
at a fraction of the cost of traditional equity offerings

7. TYPICAL TOKEN USE CASES
Company Use of funds Use of tokens
OmiseGo Proprietary blockchain for interoperable digital wallets Right to validate
Tezos Proprietary blockchain that is decentralized and self-governing Right to vote
EOS.io
Proprietary blockchain that targets higher transaction speeds and
scalability than Ethereum
Right to use
Bancor
Protocol with built-in price discovery and a liquidity mechanism,
allowing users to issue tokens or exchange them automatically
Right to use
Status
Protocol that has a messaging platform and mobile browser to
interact with decentralized applications
Payment for service
TenX Protocol for crypto debit cards Profit sharing rights
BAT Protocol for digital advertising Payment for service
Civic
Protocol for on-demand, secure and low-cost access to identity
verification services
Payment for service

8. REGULATORY TREATMENT AROUND THE WORLD
§ No definitive regulation, but have viewed cryptocurrencies with a light touch
§ MAS has launched a tokenized version of the SGD via Project Ubin
§ Application of the HoweyTest (investment of money in a common enterprise with an expectation
of profits predominantly from the efforts of others) to ICOs to determine if a particular token
should be classified as a security falling under securities law
§ Issued a ban on ICOs on Sept 4.Top 30+ cryptocurrencies saw significant, double-digit percentage
price drops, but most have begun recovery
§ Concerns over fraud and pyramid schemes
§ No regulation at current time; cryptocurrencies viewed as assets.
Regulators have started weighing in on ICOs, some declaring or contemplating outright bans. But many are
taking more cautious approaches. Cryptocurrency markets remain volatile, but highly resilient.
§ Issued a statement on Sept 5 that certain ICO structures would classify the token issuance as a
security, which would be a regulated activity that requires license
§ Following similar approach to U.S. SEC
§ Like Japan, Korea has legalized bitcoin (July 2017) as a remittance method
§ However, a digital currency task force led by the central bank intends to crackdown on ICO
issuances and intends to introduce regulations

9. Why SEC may not be able to
directly regulate ICOs
Self-regulatory framework
May not involve equity
They may not fit into the
current definition of a security,
and are technically outside of
traditional legal frameworks.
Global instruments
They are funded using
cryptocurrencies that are not
controlled by any central
authority or bank.
Pseudo-anonymously
It’s not impossible to find out
who people are, but it’s not
easy, either.
Simple Agreement for FutureTokens (SAFT)
§ Based on SAFE (an agreement to raise money in exchange for equity
without having to issue debt instruments like convertible notes).
§ SAFE is only offered to “accredited investors” ($200,000 or more a year or
have a net worth of at least $1M).
Crowdfunding
§ Guidance on when digital assets are deemed securities and whether the
firms that trade digital assets must register.
§ Sell to accredited investor
§ Regulators to adopt a regulatory sandbox.
SELF-REGULATORY FRAMEWORK
Other mechanisms
§ Escrow account (third party releases funding once milestone is reached)
§ Setting a maximum investment amount
§ Use KYC process to vet investors
In the absence of regulatory comment, the Ethereum and cryptocurrency community has taken it upon itself
to explore self-policing of crowdsales

10. BEYOND THE HYPE:THE FUTURE OF ICOs
• Individual regulatory bodies are starting to weigh in, often in piecemeal, uncoordinated fashion
• The global, borderless nature of crowdsales will eventually require more coordinated global
regulatory standards to fuel broader adoption
• The Ethereum and cryptocurrency community is looking at self-regulation, but would possibly
welcome official regulation that tempered bad actors without stifling innovation & growth
• Rampant fraud and speculation, along with poor quality crowdsales, haven’t dampened enthusiasm
for ICOs, but the crypto community fears that they could stifle long-term growth and sustainability
of ICOs as a form of fundraising if its worst excesses are not managed
• Streamlining and mainstreaming the crowdsale process is a matter of time, as tech development
matures and better security and volatility mechanisms are created
• Despite the hype, ramp-up in ICOs activity & token prices, and questionable startups issuing
tokens, the ICO phenomenon has validated: 1) the technology to raise large sums of money quickly
and cheaply over blockchains, and 2) the willingness of investors to invest large sums of money
over blockchains
• A robust regulatory framework could open the door for the tokenization or equity, debt, and
other forms of financing.This could disrupt traditional lending and capital markets as blockchain-
driven fundraising dramatically slashes execution time and costs
Regulation
Challenges
Adoption &
evolution
Despite the short term volatility and uncertainty of ICOs and cryptocurrencies, the long term implications of
blockchain-driven fundraising are significant for SCB, potentially transforming the entire capital market industry

11. APPENDIX

12. ICOs AS ETHEREUM’S KILLER APP?
Ethereum’s unique characteristics
• One of the most active Blockchain systems with large developers
community.
• Highest chances of fast recovery in case of errors.
• The only production-ready Blockchain that supports smart
contracts.
• Turing-complete language is more complete than C+++ used in
BTC blockchain, enabling freedom in features and security models.
• The tokens issued through smart contracts are executed on
EthereumVirtual Machine (EVM), making them independent from
Ethereum public Blockchain.
Active
Ease of
Development
Independence
Features
• Tokens based on Ethereum Blockchain typically adhere to the same
standard, called “ERC-20”
• This allows tokens to be interchangeable and compatible with
different protocols and projects adhering to the same standard.
Interoperability ERC-20
Decentralized
autonomous
organizations (DAOs)
Decentralized
autonomous apps
(Dapps)
Smart contracts
Ethereum’s characteristics & features are what makes it the most popular protocol for ICOs

13. ETHEREUM & DAPPs AT TECH CORE OF ICOs
Decentralized
application
(Dapp)
§ A Dapp is a system – “Blockchain enabled” website, where the smart contract is what allows it to
connect to the Blockchain.
§ The traditional web application uses HTML, CSS and javascript to render a page. It will also need
to grab details from a database utilizing an API .
§ A Dapp uses similar technology as a web, but it uses a smart contract connecting to a Blockchain.
Smart contract § Smart contracts are used to generate tokens, bound by their own rules.
Front-endWebsite API Database
Front-endDapp Smart
contract
Blockchain
Manage money Money + another piece Governance systems
To execute, smart contracts rely on
“oracles” that relay up-to-date
information about the outside
world.
Users exchange Ether as a mean
to settle a contract with another
user.The network's nodes
facilitate the distribution of data.
A decentralized autonomous
organizations (DAO) is formed;
Dapps set rule on voting and
funding.
Ethereum offers the ability to program different types of smart contracts, enabling users to build decentralized
autonomous apps (DApps) and issue tokens

14. ETHEREUM’S TOKEN STANDARDS
ERC-20
§ A set of functions written into tokens’ smart contracts. It defines how tokens should behave,
including:
§ How to get the total token supply
§ How to get the account balance
§ How to transfer the token
§ How to approve spending the token
§ ERC20 enables tokens to seamlessly interact through different Dapps and projects on Ethereum.
Developers can predict how a token will operate and integrate with less fear of errors.
ERC-223
A new development which aims to solve ERC-20 issues:
§ (1) Eliminates the problem of lost tokens:
§ Users lose tokens when they mistakenly use the instructions for sending tokens to a smart
contract.
§ ERC-223 allows users to send their tokens to either wallet or contract with the same function
transfer, eliminating confusion and lost tokens.
§ (2) Can handle incoming token transactions, and reject non-supported tokens
§ (3) Energy savings:
§ Involves a one step process vs a 2 step process (ERC-20), saving cost.
Ethereum’s token standards, which define the functions of smart contracts, are the basis upon which the ICO
market is built

15. ICO STRUCTURES
ICO STRUCTURES ARE HIGHLYVARIABLE,AND DEPENDANT ONTHE OBJECTIVE OF THE TOKEN SALE

16. The DAO
Issuing company Slock.it
Mission The first implementation of Decentralized Autonomous Organization (DAO) code to automate
organizational governance and decision-making. It aims to codify the rules and decision-making
apparatus of an organization, eliminating the need for documents and people in governing, creating a
structure with decentralized control.
Token DAO
Platform Ethereum
Amount intended 50,000 ETH / $500,000
Amount raised $160M
Date 30 April 2016
Motivation DAO allows users to direct the DAO’s operations. Users use tokens to vote.
Fund allocation 100% to the DAO
Coin distribution 100%
Token usage • The tokens represent ownership over the DAO, which includes being able to nominate and vote
on DAO activities, nominate and vote on DAO curators.
• Any profits the DAO makes on its investments will be given back to token holders as dividends.
CASE STUDY:THE DAO
The DAO was the largest ICO in history. The key to its success is its ideology of a self-governing organization.

17. Omise Go
Issuing company Omise
Mission OmiseGO is an Ethereum-based financial technology company offering a decentralized exchange
(a blockchain) and a payments platform (a wallet).
Token Omise Go (OMG)
Platform Ethereum
Amount intended Cap raised from $19M to $25M
Amount raised $25M
Date 27 June 2017
Motivation Owning
Mechanism • Tokens buys the right to validate this Blockchain.Transaction fees on the network, including
payment, interchange, trading, and clearinghouse use, are given to validators who enforce
bonded contract states.
• The token will have value derived from the fees derived from this network, with the cost of
validating.
CASE STUDY: OMISEGO
OmiseGo’s use of KYC, fundraising caps, and maximum investment per investor greatly reduced the amount of
speculation and volatility

18. Ripple Omise
Mission Ripple’s distributed financial technology enables
banks to send real-time international payments
across networks.
The complete set of powerful payment features
that allows fast, flexible and seamless experiences
all ready built-in.
Value
proposition
• Access: Direct bank to bank settlement
• Speed: instant (4 sec vs ETH 2+min)
• Certainty: real-time traceability of funds
• Cost: lowest total cost
• White label, no redirect: invisible to
users/not
• Secure
• Automate payouts: to stakeholders with API
• Ease: one-click, no card (only bank a/c)
Target
customer
Banks (remittances, corporate disbursement) E-commerce/Enterprise (payment, transfers)
Blockchain
platform
Private Public
Validators Participating institutions (banks) Anyone with Omise server
Funding $93.6M in 7 Rounds from 27 Investors (Series B) $20.4M in 4 Rounds from 9 Investors (Series B)
CASE STUDY: RIPPLEVS. OMISE
Ripple has not raised funds through ICOs. Although it has similar mission to Omise, it’s less likely to raise
funds via ICO because it’s success is less reliant on network effects and its associated externality.

19. CRYPTOCURRENCY GLOSSARY
Virtual
currency
A type of unregulated, digital money, which is issued and usually controlled by its developers, and used
and accepted among the members of a specific virtual community."
Digital
currency
A form of virtual currency that is electronically created and stored. Some types of digital currencies
are cryptocurrencies, but not all of them are.
Crypto-
currency
A digital currency in which encryption techniques are used to regulate the generation of units of
currency and verify the transactions, preventing counterfeit and operating independently of a central
bank.
Alt-coin
An abbreviation of “Bitcoin alternative,” and thus describes every single cryptocurrency except for
Bitcoin.
Coins
Coins really only have one utility — to act as simple stores of value with limited-to-no other
functionality.
Usually referred to Bitcoin
Tokens
Are programmable, representing digital assets that can have a variety of values attached.They can
represent assets as diverse as vouchers, IOUs, or even objects in the real world.
Usually referred to Ether